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"We think of Cartwheel as a way of taking what, for many people, had been a process of clipping the paper coupon from a circular and bringing it the store, and integrating that experience into one digital, seamless app on your phone," said Eddie Baeb, a spokesperson for Target.

But now, he said, the idea is to simultaneously appeal to coupon-driven and rewards-motivated shoppers.

Pilot cities were selected based on whether they were a strong or weak market in terms of existing app usage, as well as other factors.

San Diego was chosen, in part, because the region ranks among the top five nationwide for active Cartwheel users.

For now, the Cartwheel app and its associated Perks program are only available to in-store shoppers but the company said it is considering linking online purchases with points as well.

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Though Target did not disclose its plan for rolling out Perks to other areas, the test represents a noticeable shift for Target, which has never offered a points-based rewards program outside of a small test in Raleigh-Durham.

There, the company trialed a separate mobile application called Red Perks, but those users will eventually be transitioned to Cartwheel Perks.

Ultimately, the plan is to get the Cartwheel app, which collects valuable data on customers' buying preferences, into the hands of more people.

The company would also like to personalize the offers its presents to every individual at some point.